Can Substitution and Signaling Theories Explain the Relationship between External Audit Fees and the Effectiveness of Internal Corporate Governance?
Keywords:
substitution theory, signaling theory, internal governance, audit fees
Abstract
The aim of this study is to investigate the relationship between external audit fees and the effectiveness of internal corporate governance of non-financial companies listed on Abu Dhabi Securities Exchange (ADX) by testing substitution and signaling theories. To reachthis aim, data were collected from the annual reports of all non-financial companies listed on the exchange for the year 2012. The result of the analysis showed partial support to substitution theory. Effective internal audit employed by nonfinancial Emirati companies listed on ADX appeared to be negatively related to external audit fees. The relations was, however, marginally significant.
Downloads
- Article PDF
- TEI XML Kaleidoscope (download in zip)* (Beta by AI)
- Lens* NISO JATS XML (Beta by AI)
- HTML Kaleidoscope* (Beta by AI)
- DBK XML Kaleidoscope (download in zip)* (Beta by AI)
- LaTeX pdf Kaleidoscope* (Beta by AI)
- EPUB Kaleidoscope* (Beta by AI)
- MD Kaleidoscope* (Beta by AI)
- FO Kaleidoscope* (Beta by AI)
- BIB Kaleidoscope* (Beta by AI)
- LaTeX Kaleidoscope* (Beta by AI)
How to Cite
References
L Abbott, S Parker, G Peters, K (2003) The association between audit committee characteristics and audit fees. 22(2), 17-32.
Abdul Wahab, E Zain, M James, K (2011) Political connections, corporate governance and audit fees in Malaysia. 26(5), 393-418.
K Aljifri, M Moustafa (2007) The impact of corporate governance mechanisms on the performance of UAE firms: an empirical analysis. 23(2), 71-93.
Ilias Basioudis, Fifi Fifi (2004) The Market for Professional Services in Indonesia. 8(2), 153-164.
Mark Beasley, Joseph Carcello, Dana Hermanson, Terry Neal (2009) The Audit Committee Oversight Process*. 26(1), 65-122.
Mara Cameran (2005) Audit Fees and the Large Auditor Premium in the Italian Market. 9(2), 129-146.
J Carcello, D Hermanson, T Neal, R Riley (2002) Board Characteristics and Audit Fees. 9(3), 365-384.
E Carson, N Fargher, D Simon, M Taylor (2004) Audit fees and market segmentationfurther evidence on how client size matters within the context of audit fee models. 8(1), 79-91.
Jong-Hag Choi, Chansog Kim, Jeong-Bon Kim, Yoonseok Zang (2010) Audit Office Size, Audit Quality, and Audit Pricing. 29(1), 73-97.
M Clatworthy, M Peel (2006) The effect of corporate status on external audit fees: Evidence from the UK. 1(2), 169-201.
B El'fred, S Divesh (2008) The association between corporate governance and audit fees of bank holding companies. 8(1), 28-45.
Walid El-Gammal (2012) Determinants of Audit Fees: Evidence from Lebanon. 5(11), 136-145.
M Glaum, D Street (2003) Compliance with the disclosure requirements of Germany's new market: IAS versus US GAAP. 14, 64-100.
Nathalie Gonthier‐besacier, Alain Schatt (2007) Determinants of audit fees for French quoted firms. 22(2), 139-160.
Jenny Goodwin‐stewart, Pamela Kent (2006) The use of internal audit by Australian companies. 21(1), 81-101.
Alan Gregory, Paul Collier (1996) AUDIT FEES AND AUDITOR CHANGE; AN INVESTIGATION OF THE PERSISTENCE OF FEE REDUCTION BY TYPE OF CHANGE. 23(1), 13-28.
F Gul, J Tsui, C Chen (1998) Agency Costs and Audit Pricing: Evidence on Discretionary Accruals.
R Haniffa, T Cooke (2002) Culture, corporate governance and disclosure in Malaysian corporations. 38(3), 317-349.
Y Hassan, K Naser (2013) Determinants of Audit Fees: Evidence from an Emerging Economy. 6(8), 13-25.
David Hay, W Knechel, Norman Wong (2006) Audit Fees: A Meta‐analysis of the Effect of Supply and Demand Attributes*. 23(1), 141-191.
David Hay, W Knechel, Helen Ling (2008) Evidence on the Impact of Internal Control and Corporate Governance on Audit Fees. 12(1), 9-24.
H.-W Huang, L.-L Liu, K Raghunandan, D Rama (2007) Auditor industry specialization, client bargaining power, and audit fees: Further evidence. 26(1), 147-158.
P Joshi, H Al-Bastaki (2000) Determinants of audit fees: evidence from the companies listed in Bahrain. 4(2), 129-138.
W Knechel, M Willekens (2006) The Role of Risk Management and Governance in Determining Audit Demand. 33(9-10), 1344-1367.
J Krishnan, G Visvanathan (2009) Do Auditors Price Audit Committee's Expertise? The Case of Accounting versus Non-Accounting Financial Experts. 24(1), 115-144.
David Larcker, Scott Richardson (2004) Fees Paid to Audit Firms, Accrual Choices, and Corporate Governance. 42(3), 625-658.
B Li, P Wang (2006) Board characteristics and ratios of audit fee to asset. 1, 105-118.
Shilo Lifschutz (2010) Corporate Governance Characteristics and External Audit Fees: A Study of Large Public Companies in Israel. 5(3), 109-116.
M Liu, B Hu (2006) Corporate governance, agency costs and audit pricing: an empirical analysis on Chinese A-stock market panel data from 2001 to 2003. 2, 72-79.
M Mcelveen (2002) New Rules, New Challenges. 40-47.
Kamal Naser, Ahmad Al-Hussaini, Duha Al-Kwari, Rana Nuseibeh (2006) Determinants of Corporate Social Disclosure in Developing Countries: The Case of Qatar. 19, 1-23.
K Naser, R &nuseibeh (2008) Determinants of audit fees: empirical evidence from an emerging economy. 17(3), 239-254.
N O'sullivan (1999) Board Characteristics and Audit Pricing Post-Cadbury: A Research Note. 8, 253-263.
Zoe-Vonna Palmrose (1986) Audit Fees and Auditor Size: Further Evidence. 24(1), 97.
M Peel, M Clatworthy (2001) The Relationship Between Governance Structure and Audit Fees Pre-Cadbury: Some Empirical Findings. 9(4), 286-298.
Z Ping, C Wing (2011) Corporate governance: A summary review on different theory approaches. 68, 7-13.
Andrei Shleifer, Robert Vishny (1986) Large Shareholders and Corporate Control. 94(3, Part 1), 461-488.
Dan Simunic (1980) The Pricing of Audit Services: Theory and Evidence. 18(1), 161.
Jenny Stewart, Lois Munro (2007) The Impact of Audit Committee Existence and Audit Committee Meeting Frequency on the External Audit: Perceptions of Australian Auditors. 11(1), 51-69.
T Tagesson, V Blank, P Broberg, S Collin (2008) What explains the extent and content of social and environmental disclosures on corporate websites: a study of social and environmental reporting in Swedish listed corporations. 12(2), 141-158.
S Turley, M Zaman (2004) The Corporate Governance Effects of Audit Committees. 8, 305-332.
Stuart Turley, Mahbub Zaman (2007) Audit committee effectiveness: informal processes and behavioural effects. 20(5), 765-788.
Sandra Verbruggen, Johan Christiaens, Anne-Mie Reheul, Tom Van Caneghem (2011) Analysis of Audit Fees for Nonprofits. 44(4), 734-754.
Thomas Vermeer, K Raghunandan, Dana Forgione (2009) Audit Fees at U.S. Non-Profit Organizations. 28(2), 289-303.
Y Wang (2009) Control chain, agency conflicts and auditor choice. 6, 65-72.
P Wang, L Zhou (2006) Auditor's choice by China's listed companies and its governance role. 2, 88-98.
Kun Wang, Zahid Iqbal (2009) Audit pricing and auditor industry specialization in an emerging market: Evidence from China. 18(1), 60-72.
K Wang, O Sewon, Z Iqbal, L Smith (2011) Auditor Market Share and Industry Specialization of Non-Big 4 Firms. 11(2), 107-127.
X Wu (2012) Corporate governance and audit fees: Evidence from companies listed on the Shanghai Stock Exchange. 5, 321-342.
Mahbub Zaman, Mohammed Hudaib, Roszaini Haniffa (2011) Corporate Governance Quality, Audit Fees and Non‐Audit Services Fees. 38(1-2), 165-197.
Published
2014-02-04
Issue
Section
License
Copyright (c) 2013 Authors and Global Journals Private Limited
This work is licensed under a Creative Commons Attribution 4.0 International License.